"Relative to the Sept. 30 market close, the results suggests that if, Clinton wins (that is, the probability of a Trump win falls from 36 percent to 0 percent), all else equal the equity risk premium will decline from 3.55 percent to 3.45 percent and the market will rally by about 4 percent. If, on the other hand, Trump wins (that is, the probability of Trump winning rises from 36 percent to 100 percent), the equity risk premium will rise from 3.55 percent to 3.73 percent as the market sells off about 7 percent."Pared down, it says that were Hillary to win, stocks would rally 4%, but were Donald to win, markets would sink 7%. If you have a 401K or some sort of stock-fund pension, you've got a vested interest in the outcome of the presidential election.
Choose wisely, America.
ADD: I posted too soon. WaPo has an editorial commenting that Donald could single-handedly sink the global economy while Greg Ip at WSJ asked Macroeconomic Advisers to do some modeling based on Donald's proposed tax cuts and the results are a $1T increase in the annual trade deficit by 2026, currently at around $400B.
It's hard to say what happens in the future when there are dozens of variables, but most importantly we're still at the zero lower bound of the Fed rate. There is scant evidence that a tax cut, particularly at the upper marginal rate, would have any discernible effect on the economy. Even at the lower tiers, a tax cut is not very effective at stimulating growth. Which is to say, at the ZLB supply-side economics is spectacularly ineffectual macroeconomic policy.
In other words, long before Donald could increase the trade deficit, he'd probably cause the US economy to stall, and with his terrible economic dogma, he'd likely sink the US economy into a deep recession.
So I reiterate, choose wisely, America.
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